CHAPTER 8 INVENTORIES
Cost of inventories Semi-expandable property
All costs of purchase Tangible items below capitalization
Cost of conversion threshold of 15,000
Cost incurred in bringing the inventories to Policies that may appy:
their present location and condition o Properties recognized as ppe shall
Trades discounts, rebates and other similar be reclassified to the affected
items are deducted in determining cost of accounts
purchase o Recognized as expenses upon the
issue to the end user
Measurement
Inventory accounting system
LCNRV
o XPN: when inv are acquired through Consist of the system of monitoring,
non-exchange transaction, it shall be at controlling, and recording of acquisition and
fv at date of acquisition disposal of inventory
Lower of cost and current replacement Start: receipt of the purchased inventory
cost if held for distribution at no charge or itmes
for a normal charge or for consumption in Physical count is required to be done
the production process semi-annually (helps check integrity of
FV-CTS agricultural produce that an entity property custodianship)
has harvested from its biological assets (at
point of harvest) Inventory accounting subsystem
Cost Formulas Receipt, Inspection, acceptance, and
recording deliveries of inventory items
Specific identification of costs- if not Requisition and issue of inventory items
ordinarily interchangeable, and goods and Transfer and/or disposal of inventory items
services produced and segregated for
specific projects Records, forms and reports to be prepared
-inappropriate when there are large number and/or maintained
of interchangeable inventories Stock Card (SC)- used to record all
Weighted average method- used for receipts and issue of supplies and the
costing inventories that are interchangeable balance in quantity at any time
(Moving average talaga) -maintained by property/or supply div
Recognition as an expense -main sources: IAR, RIS, PO, DR
Supplies Ledger Card (SLC)- materials
Expensed when sold, exchanged, or received, issued and the bal in both quantity
distributed (record in the same period when and amount
revenue is recognized -maintained by acco div
If no revenue: when distributed or rendered -main sources: IAR, RIS, PO, DR and RSMI
Write-down to NRV and losses are Requisition and Issue Slip (RIS)- used by
recognized end-user to request issue of supplies and
There can be reversals which are reduction materials that are carried on stock
to inventories expensed -basis for availability and non-availability
Impairment Purchase request (PR) used by end-used
to request for the purchase of inventory out
Cost of inventories held for sale is greater of stock
than NRV -basis for preparing PO
Cost of inventories held for distribution or Report of Supplies and Materials Issued
consumption is greater than replacement (RSMI)- prepared by P/S custodian based
cost on RIS
-used by accounting div to prepare JEV of
Perpetual inventory method
supplies and materials
More accurate inventory records and Waste Materials Report (WMR)- used by
running a total for COGS in each period P/S custodian
Maintains records through maintenance of -report waste materials and other materials
SLC by accounting division/unit and Stock considered scrap due to replacement
card by supply and/property div/unit Report on the Physical Count of
Purchases charged as inventory except Inventories- report physical count of
purchases out of the PCF supplies by type of inv
-balance per count and per card and
short/over
-includes semi-expandable
Inspection and Acceptance Report (IAR)-
inspection and acceptance of purchased
and delivered prop, supplies and materials
Report of Accountability for Accountable
Form (RAAF)- report movement and status
of accountable form (with or without Face
value)
